The U.S. dollar declined for a second straight session during Asian trading on Tuesday, as concerns triggered by recent U.S. military action in Venezuela faded and dovish signals from Federal Reserve officials encouraged risk appetite on Wall Street.
The dollar index, which tracks the greenback against six major currencies, slipped 0.2% to 98.216. The move extended losses after the index ended a four-day rally in the previous session.
Market participants appeared less focused on geopolitical tensions. Rodrigo Catril, a currency strategist at National Australia Bank, said investors were not overly worried about geopolitical developments in the near term. As a result, demand for traditional safe-haven assets has eased, leaving the U.S. dollar under pressure.
Global markets have steadied after initial volatility caused by the surprise U.S. capture of Venezuelan President Nicolas Maduro over the weekend. The event briefly unsettled commodity markets. Maduro pleaded not guilty to narcotics-related charges in a Manhattan federal court on Monday.
Against the Japanese yen, the dollar edged 0.1% lower to 156.255. The move followed an auction of 10-year Japanese government bonds that attracted demand broadly in line with the past year’s average.
Commodity-linked currencies outperformed. The Australian dollar rose 0.1% to a one-week high of $0.6724, supported by record copper prices. The New Zealand dollar also strengthened, gaining 0.2% to $0.5798.
The greenback pulled back after touching a one-month high on Monday, as U.S. manufacturing data showed activity contracting more sharply than expected and falling to a 14-month low. According to analysts at DBS, the dollar’s rally lacked momentum once attention shifted back to U.S. economic fundamentals.
They noted that weaker data reinforced expectations for Federal Reserve easing and highlighted that geopolitical risks alone were not enough to sustain dollar strength without supportive economic indicators.
Additional pressure came from dovish remarks by Minneapolis Federal Reserve President Neel Kashkari, who warned in an interview with CNBC that the unemployment rate could rise unexpectedly.
While expectations for policy easing increased slightly after his comments, markets still anticipate no change in rates at the Federal Reserve’s upcoming meeting. Futures data from the CME Group indicate an implied 82.8% probability that rates will remain unchanged, marginally lower than last week’s reading.
In offshore trading, the dollar slipped 0.1% against the Chinese yuan to 6.9769. The euro advanced 0.1% to $1.1737, while sterling climbed 0.2% to $1.3562.
In digital asset markets, bitcoin eased 0.3% to $93,772, while ether fell 0.4% to $3,225.
